India’s Manappuram Finance falls short of profit estimates on microfinance unit woes, ET BFSI

BENGALURU – Indian gold loan financier Manappuram Finance reported a third-quarter revenue that missed analysts’ estimates on Thursday, damage by the stress in its microfinance enterprise, together with a quarter-long ban from issuing loans.

The corporate’s consolidated web revenue halved to 2.82 billion rupees ($32.5 million) within the quarter, lacking analysts’ common estimate of 4.59 billion rupees, as per knowledge compiled by LSEG.

Indian lenders have seen rising default charges in microfinance loans, or collateral-free small loans to debtors, following a interval of aggressive lending within the phase.

Bad loans and provisions in Manappuram’s microfinance unit surged four-fold to 4.73 billion rupees, accounting for a big chunk of complete company-wide provisions of 5.55 billion rupees within the October to December quarter.

In the beginning of the interval, the Reserve Financial institution of India (RBI) had barred the unit from sanctioning and disbursing loans as a result of “usurious” pricing and for charging a big mark-up over funding prices. The RBI lifted the ban final month.

Because of this, income in its microfinance enterprise dropped round 5% to six.65 billion rupees within the quarter.

Nonetheless, income from Manappuram’s gold mortgage portfolio, which contributes 75% of complete income, rose 17%, aided by gold costs leaping to report highs.

Rising gold costs improve how a lot a buyer can borrow towards bullion, benefiting gold financiers by way of loans issued.

The corporate’s web curiosity revenue rose 5%.

Whereas Manappuram missed analysts estimates, its bigger rival Muthoot Finance rode the rise in gold costs to report a bigger-than-expected quarterly revenue on Wednesday. ($1 = 86.8680 Indian rupees)

(Reporting by Nishit Navin; Modifying by Savio D’Souza)